Upholstery supplier’s sales have declined, says owner

TORONTO — Consolidated Mercantile Inc. has announced it will sell its investment interest in upholstery manufacturer and importer Distinctive Designs Furniture.

“The board is currently evaluating potential strategies for implementing the sale,” the company said in a statement.

The publicly held merchant banking and management holding company owns 50.3% of Distinctive Designs, which sells both fabric and leather upholstery.

Consolidated said Distinctive’s sales in the first quarter were C$6.3 million, off 18% from the C$7.7 million recorded for the same period of 2013.

For all of 2013, Distinctive’s sales were C$30.2 million, down from C$37 million in 2012. Consolidated recorded net losses of C$9.1 million for 2013 and C$6.1 million for 2012, most of which it attributed to setbacks suffered by Distinctive throughout North America.

“Distinctive’s results were negatively impacted by the continually strengthening Canadian dollar, a difficult retail environment and increased competition, primarily from offshore manufacturers,” Fred Litwin, Consolidated Mercantile’s president, said in a statement.

However, he reassured shareholders that Distinctive’s management was working towards a turnaround. He said the company is pursuing a profit improvement program to reduce material and labor costs and increase sales.

“This includes a substantial increase in its component import programs as well as the initiation of the import of certain finished products, the expansion of its product line to include motion furniture, the closure of its North Carolina plant and the consolidation of its three Toronto facilities into two,” Litwin said. “Distinctive continues to work on new sales and marketing programs, as well as channels of distribution with both existing and prospective new customers.”

Some 41% of Distinctive’s sales are to U.S. retailers. In addition to its brand, the company produces goods under the Kroehler label for the Canadian market and has about 22 Kroehler in-store galleries across the country. 

Distinctive President Alan Kornblum also is a major shareholder in the company.

In addition to Distinctive Designs, Consolidated also has an equity position in Polyair Inter Pack, a producer of specialty cover and packaging producer.